Shareholders' Equity

12 Months Ended

Dec. 31, 2015

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders’ equity

Common stock

BNY Mellon has 3.5 billion authorized shares of common stock with a par value of $0.01 per share. At Dec. 31, 2015, 1,085,342,985 shares of common stock were outstanding.

Common stock repurchase program

On March 26, 2014, in connection with the Federal Reserve’s non-objection to our 2014 capital plan, the board of directors authorized a stock purchase program providing for the repurchase of an aggregate of $1.74 billion of common stock beginning in the second quarter of 2014 and continuing through the first quarter of 2015. On March 11, 2015, in connection with the Federal Reserve’s non-objection to our 2015 capital plan, the board of directors authorized a new stock purchase program providing for the repurchase of an aggregate of $3.1 billion of common stock beginning in the second quarter of 2015 and continuing through the second quarter of 2016. Of the $3.1 billion authorization, common stock repurchases of $700 million was contingent on a prior issuance of $1 billion of qualifying preferred stock. The Company completed the issuance of preferred stock on April 28, 2015. Share repurchases may be executed through repurchase plans designed to comply with Rule 10b5-1 and through derivative, accelerated share repurchase and other structured transactions. In 2015, we repurchased 55.6 million common shares at an average price of $42.35 per common share for a total of $2.4 billion. At Dec. 31, 2015, the maximum dollar value of shares that may yet be purchased under the March 11, 2015 program, including employee benefit plan repurchases, totaled $1.1 billion.

Preferred stock

BNY Mellon has 100 million authorized shares of preferred stock with a par value of $0.01. The table below summarizes BNY Mellon’s preferred stock issued and outstanding at Dec. 31, 2015 and Dec. 31, 2014.

Preferred stock summary				Liquidation preference per share (in dollars)		Total shares issued and outstanding
								Carrying value (a)
(dollars in millions, unless otherwise noted)		Per annum dividend rate				Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015		Dec. 31, 2014
Series A	Noncumulative Perpetual Preferred Stock	Greater of (i) three-month LIBOR plus 0.565% for the related distribution period; or (ii) 4.000%		$	100,000	5,001	5,001	$	500	$	500
Series C	Noncumulative Perpetual Preferred Stock	5.2	%	$	100,000	5,825	5,825	568		568
Series D	Noncumulative Perpetual Preferred Stock	4.50% commencing Dec. 20, 2013 to but excluding June 20, 2023, then a floating rate equal to the three-month LIBOR plus 2.46%		$	100,000	5,000	5,000	494		494
Series E	Noncumulative Perpetual Preferred Stock	4.95% commencing Dec. 20, 2015 to and including June 20, 2020, then a floating rate equal to the three-month LIBOR plus 3.42%		$	100,000	10,000	—	990		—
Total						25,826	15,826	$	2,552	$	1,562

(a) The carrying value of the Series C, Series D and Series E preferred stock is recorded net of issuance costs.

Holders of both the Series A and Series C preferred stock are entitled to receive dividends on each dividend payment date (March 20, June 20, September 20 and December 20 of each year), if declared by BNY Mellon’s Board of Directors. Holders of the Series D preferred stock are entitled to receive dividends, if declared by our board of directors, on each June 20 and December 20, to but excluding June 20, 2023; and on each March 20, June 20, September 20 and December 20, from and including June 20, 2023. Holders of the Series E preferred stock are entitled to receive dividends, if declared by our board of directors, on each June 20 and December 20, to and including June 20, 2020; and on each March 20, June 20, September 20 and December 20, from and including September 20, 2020. BNY Mellon’s ability to declare or pay dividends on, or purchase, redeem or otherwise acquire, shares of our common stock or any of our shares that rank junior to the preferred stock as to the payment of dividends and/or the distribution of any assets on any liquidation, dissolution or winding-up of BNY Mellon will be prohibited, subject to certain restrictions, in the event that we do not declare and pay in full preferred dividends for the then current dividend period of the Series A preferred stock or the last preceding dividend period of the Series C, Series D and Series E preferred stock.

All of the outstanding shares of the Series A preferred stock are owned by Mellon Capital IV, which will pass through any dividend on the Series A preferred stock to the holders of its Normal Preferred Capital Securities. All of the outstanding shares of the Series C, Series D and Series E preferred stock are held by the depositary of the depositary shares, which will pass through the applicable portion of any dividend on the Series C, Series D and Series E preferred stock to the holders of record of their respective depositary shares.

On Dec. 21, 2015, The Bank of New York Mellon Corporation paid the following dividends for the noncumulative perpetual preferred stock for the dividend period ending in December 2015 to holders of record as of the close of business on Dec. 5, 2015:

• $1,011.11 per share on the Series A Preferred Stock (equivalent to $10.1111 per Normal Preferred Capital Security of Mellon Capital IV, each representing a 1/100th interest in a share of Series A Preferred Stock);

• $1,300.00 per share on the Series C Preferred Stock (equivalent to $0.3250 per depositary share, each representing a 1/4,000th interest in a share of the Series C Preferred Stock);

• $2,250.00 per share on the Series D Preferred Stock (equivalent to $22.50 per depositary share, each representing a 1/100th interest in a share of the Series D Preferred Stock); and

• $3,190.00 per share on the Series E Preferred Stock (equivalent to $31.90 per depositary share, each representing a 1/100th interest in a share of the Series E Preferred Stock).

The preferred stock is not subject to the operation of a sinking fund and is not convertible into, or exchangeable for, shares of our common stock or any other class or series of our other securities. Subject to the restrictions in BNY Mellon’s 2007 replacement capital covenant, subsequently amended on May 8 and Sept. 11, 2012, we may redeem the Series A preferred stock, in whole or in part, at our option. We may also, at our option, redeem the shares of the Series C preferred stock in whole or in part, on or after the dividend payment date in September 2017, the Series D preferred stock in whole or in part, on or after the dividend payment date in June 2023 and the Series E preferred stock in whole or in part, on or after the dividend payment date in June 2020. The Series C, Series D or Series E preferred stock can be redeemed in whole but not in part at any time within90 days following a regulatory capital treatment event (as defined in each of the Series C, Series D and Series E’s Certificates of Designation).

Terms of the Series A, Series C, Series D and Series E preferred stock are more fully described in each of their Certificate of Designations, each of which is filed as an Exhibit to BNY Mellon’s Annual Report on Form 10-K for the year ended Dec. 31, 2015.

Temporary equity

Temporary equity was $200 million at Dec. 31, 2015 and $229 million at Dec. 31, 2014. Temporary equity represents amounts recorded for redeemable non-controlling interests resulting from equity-classified share-based payments and other investment arrangements that are currently redeemable or are expected to become redeemable. The current redemption value of such awards is classified as temporary equity and is adjusted to its redemption value at each balance sheet date.

Capital adequacy

Regulators establish certain levels of capital for bank holding companies and banks, including BNY Mellon and our bank subsidiaries, in accordance with established quantitative measurements. For the Parent to maintain its status as a financial holding company, our bank subsidiaries and BNY Mellon must, among other things, qualify as “well capitalized”.

As of Dec. 31, 2015 and Dec. 31, 2014, BNY Mellon and our bank subsidiaries were considered “well capitalized” on the basis of the Tier 1 and Total capital ratios and, in the case of our bank subsidiaries, the CET1 ratio and the leverage capital ratio (Tier 1 capital to quarterly average assets as defined for regulatory purposes).

Our consolidated and largest bank subsidiary, The Bank of New York Mellon, regulatory capital ratios are shown below.

Consolidated and largest bank subsidiary regulatory capital ratios(a)	Dec. 31,
	2015		2014
Consolidated regulatory capital ratios:
CET1	10.8	%	11.2	%
Tier 1 capital ratio	12.3		12.2
Total (Tier 1 plus Tier 2) capital ratio	12.5		12.5
Leverage capital ratio	6.0		5.6
The Bank of New York Mellon regulatory capital ratios:
CET1	11.8	%	N/A
Tier 1 capital ratio	12.3		12.4	%
Total (Tier 1 plus Tier 2) capital ratio	12.5		12.6
Leverage capital ratio	5.9		5.2

(a) The CET1, Tier 1 and Total risk-based regulatory capital ratios are based on Basel III components of capital, as phased-in, and the Advanced Approach framework as the related RWA were higher using that framework. The leverage capital ratio is based on Basel III components of capital and quarterly average total assets, as phased-in. For BNY Mellon to qualify as “well capitalized,” its Tier 1 and Total (Tier 1 plus Tier 2) capital ratios must be at least 6% and 10%, respectively. For The Bank of New York Mellon, our largest bank subsidiary, to qualify as “well capitalized,” its CET1, Tier 1, Total and leverage capital ratios must be at least 6.5%, 8%, 10% and 5%, respectively. For The Bank of New York Mellon to qualify as “adequately capitalized,” it’s CET1, Tier 1, Total and leverage capital ratios must be at least 4.5%, 6%, 8% and 4%, respectively.

If a financial holding company such as BNY Mellon fails to qualify as “well capitalized”, it may lose its status as a financial holding company, which may restrict its ability to undertake or continue certain activities or make acquisitions that are not generally permissible for bank holding companies without financial holding company status. If The Bank of New York Mellon or BNY Mellon, N.A. fails to qualify as “well capitalized”, it may be subject to higher FDIC assessments.

If a bank holding company such as BNY Mellon or bank such as The Bank of New York Mellon or BNY Mellon, N.A. fails to qualify as “adequately capitalized”, regulatory sanctions and limitations are imposed.

The following table presents the components of our transitional CET1, Tier 1 and Tier 2 capital, the RWA determined under both the Standardized and Advanced Approaches and the average assets used for leverage capital purposes.

Components of transitional capital (a) (in millions)	Dec. 31,
	2015			2014
CET1:
Common shareholders’ equity	$	36,067		$	36,326
Goodwill and intangible assets	(17,295		)	(17,111		)
Net pension fund assets	(46		)	(17		)
Equity method investments	(296		)	(314		)
Deferred tax assets	(8		)	(4		)
Other	(5		)	4
Total CET1	18,417			18,884
Other Tier 1 capital:
Preferred stock	2,552			1,562
Trust preferred securities	74			156
Disallowed deferred tax assets	(12		)	(14		)
Net pension fund assets	(70		)	(69		)
Other	(25		)	(17		)
Total Tier 1 capital	20,936			20,502
Tier 2 capital:
Trust preferred securities	222			156
Subordinated debt	149			298
Allowance for credit losses	275			280
Other	(12		)	(11		)
Total Tier 2 capital - Standardized Approach	634			723
Excess of expected credit losses	37			13
Less: Allowance for credit losses	275			280
Total Tier 2 capital - Advanced Approach	$	396		$	456
Total capital:
Standardized Approach	$	21,570		$	21,225
Advanced Approach	$	21,332		$	20,958
Risk-weighted assets:
Standardized Approach (b)	$	159,893		$	125,562
Advanced Approach:
Credit Risk	$	106,974		$	120,122
Market Risk	2,148			3,046
Operational Risk	61,262			45,112
Total Advanced Approach	$	170,384		$	168,280
Average assets for leverage capital purposes	$	351,435		$	368,140

(a) Reflects transitional adjustments to CET1, Tier 1 capital and Tier 2 capital required in 2015 under the U.S. capital rules.

(b) RWA under the Standardized Approach at Dec. 31, 2014 was determined using a Basel I-based calculation. Effective Jan. 1, 2015, we implemented the Basel III Standardized Approach which used a broader array of more risk sensitive risk-weighting categories.

The following table presents the amount of capital by which BNY Mellon and our largest bank subsidiary, The Bank of New York Mellon, exceeded the capital thresholds determined under the transitional rules at Dec. 31, 2015.

Capital above thresholds at Dec. 31, 2015
(in millions)	Consolidated			The Bank of New York Mellon		(b)
CET1	$	10,750	(a)	$	7,333
Tier 1 capital	10,713		(b)	5,837
Total capital	4,294		(b)	3,394
Leverage capital	6,879		(a)	2,464

(a) Based on minimum required standards.

(b) Based on well capitalized standards.